KBRA Boosts New Jersey's Bond Rating

KBRA Boosts New Jersey's Bond Rating
Only Credit Rating Upgrade in New Jersey History to Come During a Governor's First Year in Office

(TRENTON) - Kroll Bond Rating Agency (KBRA) announced it has boosted the State's credit rating from A+ to AA- citing the state's "increasingly well-established track record of full actuarial pension funding, substantial progress in reducing long-term liabilities, and adherence to improved budget management."

The move by KBRA marks the first credit rating upgrade under the administration of Governor Mikie Sherrill, and the first time the State's credit rating has been boosted during a governor's first year in office.

"This is great news for New Jersey. In just 7 months, we've taken on the tough challenges and the status quo, and that work is being recognized. This upgrade to AA-, the highest rating KBRA has given New Jersey since it began rating the state in 2015, reflects how we've tackled our fiscal challenges head on, and already delivered real results for New Jerseyans," said Governor Sherrill. "We enacted the most fiscally responsible budget in decades, cutting the structural deficit by more than half while delivering record property tax relief and school funding, making a full pension payment, expanding the child tax credit, and maintaining a $6 billion surplus. We will keep building on that progress-protecting taxpayers, expanding opportunity, attracting investment, and ensuring that New Jersey continues to be a state people can count on."

"This upgrade from KBRA is recognition of the hard work by this administration to craft a fiscally sound FY 2027 budget," said Treasurer Aaron Binder. "In reducing the structural deficit while still making the full pension payment and maintaining a healthy surplus, we've shown that governing responsibly and maintaining the state's fiscal health go hand in hand."

This is KBRA's second upgrade of the State's rating. In its report on the upgrade, KBRA cited the state's "maintenance of considerable financial flexibility." The AA- rating is the highest the state has ever been rated by KBRA, which began rating the state in 2015.

"The FY 2027 Budget continues this discipline, providing for a full actuarially determined pension contribution (ADC) for a sixth consecutive year and a projected year-end undesignated fund balance equivalent to 10.0% of appropriations," KBRA stated in its upgrade report.

The upgrade brings the KBRA rating one step above S&P (A+) and Fitch (A+) and in line with the Moody's rating of Aa3.

Credit ratings are an important factor in the State's fiscal health as higher ratings allow the State to borrow money at a lower interest rate, saving taxpayers money as well as demonstrating the continued improvement of the State's long-term fiscal health.

This is the tenth consecutive rating upgrade from the four major agencies since the State was downgraded during the COVID-19 pandemic.

The full release from KBRA as well as a history of state credit ratings are attached.